Settlement unsealed in eating-disorder suit

Public access trumped privacy rights in a case that required court approval of a personal injury settlement for a minor plaintiff.

Guardians of a young girl sued the Ambassador Programs Inc. after the girl, 11 years old at the time, returned from a three-week trip to Australia weighing only 91 pounds. The girl’s parents alleged the program, which operates People to People International trips, failed to recognize the girl suffered from an eating disorder.

Plaintiffs sued the program for negligence, fraud, breach of contract and violation of the Virginia Consumer Protection Act. The parties settled the case in August and under Va. Code § 8.01-424, sought approval of the settlement in the Alexandria U.S. District Court.

The parties asked Senior U.S. Judge T.S. Ellis III to seal the settlement. No one showed up at the required court hearing to challenge the request to seal, but in K.S. v. Ambassador Programs Inc., Ellis denied the request under the balancing test used in the 4th Circuit.

Sealing the record was necessary, the parties argued, to keep the settlement terms from being used by other potential plaintiffs or for negative publicity against the defendants. They also claimed the girl’s privacy would be undermined by exposing details of her settlement and her physical, mental and emotional injuries.

Nobody likes negative publicity. But it “does not amount to an ‘improper purpose’ sufficient to warrant sealing,” Ellis said. The statements at issue here were not akin to “disgusting details of a divorce case” or “libelous statements for press consumption,” Ellis said. Nor would release of the settlement numbers create a scandal.

The court concluded the settlement figures are “fair and reasonable,” and the girl’s privacy interests would remain protected by the continued use of only initials for identification.

The court acknowledged that of course private parties may craft their own settlements that remain confidential.

But when the law prescribes a role for courts, as in the Virginia statute requiring court review of a settlement involving a minor, the calculus can change.

“By mandating judicial review, the statute ensures that the compromise serves the best interests of a party who lacks the legal capacity to enter a binding agreement. No good cause or persuasive reason had been adduced to warrant concealing judicial review of the settlement from public scrutiny,” the judge concluded.

The numbers? The gross settlement of the case was for $600,000, $240,000 of which went for attorney’s fees and $66,887.19 for costs. The plaintiffs’ ERISA health insurance plan came in for $286,588.81 for costs of the girl’s care.

Ellis said the net settlement of $286,588.81 for plaintiffs reasonably compensated them, given the costs of the girl’s hospitalization and medical treatment. The girl, who happily is “currently healthy and thriving” at age 15, will receive two-thirds of the settlement, or $191,059.21.
By Deborah Elkins